Group 1 - The thorium molten salt concept has gained market attention, leading to significant stock price increases for related companies [1] - Baose shares have been involved in the thorium molten salt reactor project since 2017, with a contract amounting to 2.5585 million yuan for the main container equipment, delivered in 2018 [1] - Hailu Heavy Industry has participated in the thorium molten salt reactor project, successfully passing expert group acceptance for a safety device related to the 2MWt liquid fuel thorium molten salt experimental reactor [1] Group 2 - Jiangsu Shentong is currently developing various valve products required for the thorium molten salt reactor [2] - Zhongmi Holdings has applied its cooling salt circulation pump sealing products in the Gansu thorium molten salt nuclear reactor project, with sealing requirements similar to those of pressurized water reactors [2] - Fushun Special Steel is providing high-performance special steel materials for the thorium molten salt experimental reactor project [3] Group 3 - Antai Technology is not currently involved in the 2MW thorium molten salt experimental reactor business [4] - Electric Power Investment is advancing a major asset restructuring, divesting existing financial businesses and acquiring quality nuclear power assets, but is not yet involved in thorium molten salt reactor projects [4]

Financial Data and Key Metrics Changes - Q2 revenues reached $240 million, reflecting an 18% year-over-year increase and at the upper end of expectations, although 2% lower than Q1 [14] - Q2 gross margin was 12.5%, a slight increase of 10 basis points from Q1 but at the lower end of expectations due to hiring challenges [14] - Operating income for Q2 was $6.1 million, with net interest expense aligned with expectations at $1.6 million [14] Business Line Data and Key Metrics Changes - The revenue upside in Q2 was primarily driven by the lower margin gas panel integration business [4] - Hiring and retention challenges have limited output volumes, impacting the ability to achieve expected gross margins [5][6] - Significant progress was made in qualifying new proprietary components, including a major milestone with the flow control product [9][10] Market Data and Key Metrics Changes - Customer demand environment remains steady, with expectations for modest growth in wafer fab equipment (WFE) for 2025 [6] - Year-to-date revenues are up 20% year-over-year, with expectations to outperform overall WFE growth for 2025 [6] - Demand for NAND investments is continuing into the second half, while advanced packaging has plateaued [35] Company Strategy and Development Direction - The company is focused on ramping internal supply to meet strong customer demand and improve gross margins [6][10] - A new product strategy is gaining traction, with ongoing qualifications and commercialization of proprietary components [10] - The company aims to achieve a gross margin target of 20% as it scales production and aligns output with customer needs [77] Management's Comments on Operating Environment and Future Outlook - Management expressed a more conservative view on hiring and gross margin expectations for the upcoming quarters [12] - The second half of 2025 is expected to be slightly front-half weighted, with potential for a slower quarter in December [11] - Management remains confident in the long-term strategy but acknowledges the need for improved visibility on revenue growth and cost targets before raising gross margin expectations significantly [12] Other Important Information - The company announced CEO succession plans, with the current CEO remaining until a successor is identified [18][19] - The balance sheet shows cash and equivalents totaling $92 million, down from Q1, reflecting working capital investments [15] Q&A Session Summary Question: Can you unpack the dynamics that affected gross margins in Q2? - Management indicated that hiring challenges and turnover impacted the ability to meet production needs, which affected gross margins [25][26] Question: Where is the demand coming from in Q3? - Demand is strong in foundry logic and NAND, while advanced packaging has plateaued [35] Question: Are there any market share issues arising from hiring or retention challenges? - Management noted that market share is impacted by internal supply issues, as external purchases prevent capturing market share [44] Question: What are the expectations for the second half of the year? - Management expects a slight decline in the second half, primarily due to timing of shipments and customer demand patterns [90][91] Question: Are tariffs impacting the business? - Management confirmed that tariffs are being passed on to customers, and regulations are clearer now, allowing for better management of impacts [61][62]